State Continues to Funnel Funds into Graduate Medical Education

Shrinking support for charity care offset at some hospitals by increase in funds to train tomorrow’s doctors and specialists

While funding for charity care has been significantly reduced in recent years, Gov. Chris Christie has been steadily increasing a separate fund to assist teaching hospitals, more than tripling New Jersey’s investment over the past eight years in facilities that train the next generation of doctors.

The governor’s proposed budget for fiscal year 2018, which begins July 1, includes $218 million in Graduate Medical Education funds for the 43 hospitals that have programs for interns and residents, according to the state Department of Health, which administers it. The funding — $30 million more than was budgeted this year — includes state and federal dollars; generally, for each $1 New Jersey budgets, Washington, D.C., provides $2.

GME dollars are distributed based on a formula that considers the amount hospitals spend on medical residents and interns, figures included in a Medicaid report facilities must file with the state, the DOH explained. The funding covers programs that train interns and residents in various medical fields. Christie has made this a priority, citing a lack of primary care and certain specialty physicians that experts fear is reducing access to healthcare for Garden State residents, even if they do have insurance. A detailed breakdown of the proposed allocation for fiscal 2018, released earlier this month, calls for GME payments that range from nearly $81,000 for Capital Health Medical Center in Hopewell to more than $31 million for University Hospital in Newark.

While the overall level of hospital funding has decreased by hundreds of millions of dollars in recent years, increases in GME have helped some hospitals offset losses they saw in government support for charity care. But very few of the state’s 72 acute-care facilities come out ahead overall, when compared to current funding levels. Funding in other categories — Delivery System Reform Incentive Payment (DSRIP), designed to reward innovation, mental-health funding, and support for University Hospital, a major teaching hospital in Newark that has long received extra support — has remained largely stable.)

For example:

In fiscal 2018, Cooper Hospital is slated to collect more than $30 million in GME, $5 million more than it will receive this year, but that won’t be enough to offset the greater than $8 million drop in its charity-care reimbursements.

St. Joseph’s Medical Center in Paterson could get more than $17 million in GME, a nearly $2 million boost over the current funding level, but it stands to lose nearly $5 million in charity care.

Newark Beth Israel Medical Center is anticipating a jump in GME of more than $3 million, to more than $24 million in the coming year, but it could lose nearly $4 million through charity care.

Charity care — a $1/$1 mix of state and federal funds — has declined nearly $400 million since fiscal 2015 to $252 million in proposed budget; funding levels reflect how much facilities spend on uncompensated care, a tab that has shrunk considerably as the Affordable Care Act extended insurance coverage to some additional 800,000 New Jersey residents. While hospital officials welcomed the increase in GME dollars, but have raised concerns about continuing cuts to charity care, especially given the uncertainties of the ACA, which Republicans in Congress are seeking to reform.

In his February budget speech, Christie said reduction in costs allowed the government to address other healthcare priorities. “We continue to be concerned about a doctor and nurse shortage in our state. So, we are investing a portion of this [charity care] savings into our Graduate Medical Education program,” the governor said. “This will ensure that New Jersey residents have continued access to well trained doctors and encourage those doctors to develop roots and make New Jersey their permanent homes.”

A need for more medical providers — especially primary-care physicians, psychiatrists, and other specialists — has become a growing concern for policy makers who acknowledge that insurance coverage alone won’t ensure patients get quality medical care. When Christie took office in 2011, GME was funded at $60 million and allocated to 22 facilities, the DOH said.

“This proposed funding furthers the state’s investment in a strong healthcare workforce and healthcare quality and reflects the governor's ongoing commitment to the growth of New Jersey's medical schools and the expansion of hospital-based teaching programs,” added health commissioner Cathleen Bennett.

Under the governor’s guidance — and muscle from Democratic legislative leaders — New Jersey embarked on a controversial reform of its graduate medical education system in 2013, dismantling the University of Medicine and Dentistry of New Jersey and merging most of its schools under the umbrella of Rutgers University. Since then, the state has also seen the opening of Cooper Medical School of Rowan University, in Camden, and the Seton Hall School of Medicine, a private college in Bergen County that involves Hackensack University Medical Center.